EDMP, Inc. A Short Course On Investing

A Short Course On Investing

Our site is dedicated to promoting sound fundamental investing practices. Fundamental investing, buying sound businesses at reasonable prices and holding them, is proven to being the most reliable, safest, and best performing strategy of all.

Great investors such as Ben Graham, Warren Buffett and Peter Lynch, to name a few, have led the way and proven this strategy with real world superior results. Their philosophies and ideas are worth listening to, and will lead to long-term investing success.

Their words of wisdom should be reviewed and contemplated. Therefore, we offer this section of our website as a short course in investing prowess. We suggest you visit it often. Read their guidance, think about each quote, evaluate its logic and soundness and learn to be a successful investor. Most importantly, follow their advice with discipline and total commitment. The rewards will be profound.

We have divided these quotes into four important sections, click on any of the button below to go directly to that section.

Sound Principles of Investing
How to Think About Stock Prices
How to Think About the Stock Market
Invest Like A Business Owner


 
Sound Principles of Investing

"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1." Warren Buffett


"To win you must not lose." Ben Graham

"To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework." Warren Buffett


"There are no 'Good News' Newspapers" Anonymous

"It is the underlying rate of technological change that determines the growth rate." Charles C. Carnevale

"The greatest weapon against fear is knowledge, which ultimately leads to wise and prudent judgment." Charles C. Carnevale, EDMP, Inc.

"Risk comes from not knowing what you are doing." Warren Buffett

"In investments, there's no such thing as a called strike. You can stand there at the plate and the pitcher can throw a ball right down the middle, and if it's General Motors at 47 and you don't know enough to decide on General Motors at 47, you let it go right on by and no one's going to call a strike. The only way you can have a strike is to swing and miss." Warren Buffett

"One would think that anyone whose profession is investing would make Warren a Serious Case study and Analyze and Dissect his philosophy." Mary Buffett & David Clark 'Buffettology'
 
On Warren Buffett - "He is a man who has taken the investment and business philosophies of some of the greatest minds that have addressed the subjects of commerce and capital and synthesized an absolutely new approach based on these old lessons. His approach is in many ways contrary to conventional wall street wisdom." Mary Buffett & David Clark 'Buffettology'

"Concept of the concentrated portfolio." Mary Buffett & David Clark 'Buffettology'

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How to Think About Stock Prices

"Earnings determine market price. Always have, always will." Charles C. Carnevale, EDMP, Inc.
 
"Berkshire buys when the lemmings are heading the other way. Most people get interested in stocks when everyone else is. You can't buy what is popular and do well." Warren Buffett

"Through extensive research and analysis, we have discovered and confidently determined that thoroughly understanding and focusing on the clear correlation and functional relationship between earnings and market price leads to superior investment results with a considerable reduction in risk." Charles C. Carnevale, EDMP, Inc.
 
"Earnings, Earnings, Earnings" Peter Lynch - 'One Up On Wall Street'

"You can see the importance of earnings on any chart that has an earnings line running alongside the stock price. On chart after chart the two lines will move in tandem, or if the stock price strays away from the earnings line, sooner or later it will come back to the earnings." Peter Lynch - 'One Up On Wall Street'
 
"A quick way to tell if a stock is overpriced is to compare the price line to the earnings line. If you bought familiar growth companies ... when the stock price fell well below the earnings line, and sold them when the stock price rose dramatically above it, the chances are you'd do pretty well." Peter Lynch - 'One Up On Wall Street'

"The P/E ratio of any company that's fairly priced will equal its growth rate. I'm talking about growth rate of earnings here." Peter Lynch - 'One Up On Wall Street'
 
"Inactivity strikes us as Intelligent behavior." Warren Buffett, 1996 Berkshire Hathaway Annual Report

"For some reason, people take their cues from price action rather than from values. What doesn't work is when you start doing things that you don't understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it's going up." Warren Buffett
 
"Just because you buy a stock and it goes up does not mean you are right. Just because you buy a stock and it goes down does not mean you are wrong." Peter Lynch 'One Up On Wall Street'

"What makes stocks valuable in the long run isn't the market. It's the profitability of the shares in the companies you own. As corporate profits increase, corporations become more valuable and sooner or later, their shares will sell for a higher price." Peter Lynch, Worth Magazine, September 1995
 
"In the long run, it's EARNINGS that determine market price and dividend income." Charles C. Carnevale, EDMP, Inc.

"Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised. It's only when the tide goes out that you learn who's been swimming naked." Warren Buffett
 
"Unrealized Market Depreciation occurs when the market price of a publicly traded security declines. Permanent impairment of Capital occurs when the Fundamental values of a business are dissipated with the consequent long-term adverse consequences." Martin J. Whitman, Chairman of the Board, Third Avenue Value Fund

"Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices." Mary Buffett & David Clark 'Buffettology'

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How to Think About the Stock Market


 
"In times of crisis, money moves from weak hands to strong hands." Wall Street maxim
 
"I don't believe in predicting markets. I believe in buying great businesses - especially companies that are undervalued, and/or under-appreciated" Peter Lynch 'One Up On Wall Street'
 
"If we see anything that relates to what's going to happen in Congress, we don't even read it. We just don't think it's helpful to have a view on these matters." Warren Buffett

"The portfolio of great businesses must act and be positioned exactly as the averages (S&P 500, DJIA, etc.). In other words, the portfolio must not be traded except under the extreme circumstances." Charles C. Carnevale, EDMP, Inc.

 
"The reality of running with the herd is that your ultimate destination is the slaughter house." Charles C. Carnevale

"I'd be a bum on the street with a tin cup if the markets were always efficient." Warren Buffett

 
"Investing in a market where people believe in efficiency is like playing bridge with someone who has been told it doesn't do any good to look at the cards." Warren Buffett

"The stock market ought to be irrelevant. If I could convince you of this one thing, I'd feel this book has done it's job. And if you don't believe me, believe Warren Buffett. "As far as I'm concerned," Buffett has written, "the stock market doesn't exist. It is only there as a reference to see if anybody is offering to do anything foolish." Peter Lynch 'One Up On Wall Street'

 
"The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable." Warren Buffett

"The Stock market is always and never rational." Ben Graham
 
"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years." Warren Buffett

"(Partner) Charlie (Munger) and I never have an opinion on the market because it wouldn't be any good and it might interfere with the opinions we have that are good." Warren Buffett

 
"The market is there only as a reference point to see if anybody is offering to do anything foolish. When we invest in stocks, we invest in businesses." Warren Buffett

"If we find a company we like, the level of the market will not really impact our decisions. We will decide company by company. We spend essentially no time thinking about macroeconomic factors. In other words, if somebody handed us a prediction by the most revered intellectual on the subject, with figures for unemployment or interest rates, or whatever it might be for the next two years, we would not pay any attention to it. We simply try to focus on businesses that we think we understand and where we like the price and management." Warren Buffett
 
"Every investor should be prepared financially and psychologically for the possibility of poor short-term results. For example, in the 1973-74 decline, the investor would have lost money on paper, but if he held on and stuck with the approach, he would have recouped in 1975-76 and gotten an average 15% return for the five year period." Ben Graham

"In the short run, the market is a voting machine, reflecting a voter registration test that requires only money, not intelligence or emotional stability. But in the long run, the market is a weighing machine." Ben Graham quoted by Warren Buffett in the 1993 Berkshire Hathaway Annual Report.
 
"At EDMP we realize that attempting to forecast markets or stock prices in the short-run is an exercise in futility. Short-term market movements are driven and dominated by emotion and not rational thought. At any given moment in time, the powerful emotions of fear or greed can and will overshadow reason. However, in the longer-run, dialectic thinking prevails." Charles C. Carnevale, EDMP, Inc.

"EDMP believes that the stock market has nothing to do with investing. Whether "bull" or "bear," the market always contains overpriced, fairly priced, and under-priced companies." Charles C. Carnevale, EDMP, Inc.
 
"Don't try to buy at the bottom and sell at the top. This can't be done except by liars." Bernard Baruch

"Last week is the time you should have bought or sold, depending on which you didn't do." Leonard Louis Levinson, Communicator Magazine

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Invest Like a Business Owner

"Judge your holdings by how well their businesses are performing rather than what a "schizophrenic" Wall Street may be saying. If fundamentals are good and the price falls, hold or buy more as appropriate. If the price rises to unjustifiable valuations, sell and replace to protect against risk regardless of fundamentals." Charles C. Carnevale, EDMP, Inc.
 
"Ben Graham said you should look at stocks as small pieces of the business. Look at (market) fluctuations as your friend rather than your enemy - profit from folly rather than participate in it. He said the three most important words of investing: "margin of safety." I think those ideas, 100 years from now, will still be regarded as the three cornerstones of sound investing." Warren Buffett

"Having a business perspective on investing is more about discipline than philosophy and once understood it demands absolute devotion. Stray from it, and you will wander the financial lunar landscape, forever, dancing to the folly called forth by fear & greed. Adhere to its wisdom, and the foolishness of others becomes the field in which you reap your harvest." Mary Buffett & David Clark 'Buffettology'

 
"It is a discipline that tends to tell the investor as much if not more what not to buy as what to buy." Mary Buffett & David Clark 'Buffettology'

"Our strategy is based on the simple logic and reality that great businesses are by definition better than average." Charles C. Carnevale, EDMP, Inc.
 
"Keynes essentially said don't try and figure out what the market is doing. Figure out a business you understand, and concentrate." Warren Buffett

"We will continue to ignore political and economic forecasts which are an expensive distraction for many investors and businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%. But surprise - none of these blockbuster events made even the slightest dent in Ben Graham's investment principles. Nor did they render unsound the negotiated purchases of fine businesses at sensible prices. Imagine the cost to us, if we had let a fear of unknowns cause us to defer or alter the deployment of capital. Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist." Warren Buffett, Berkshire Hathaway 1994 Annual Report

 
"If you aren't willing to own a stock for ten years don't even think about owning it for ten minutes" Warren Buffett, 1996 Berkshire Hathaway Annual Report

"Investment students need only two well taught courses: - How to Value a Business, and - How to think about market prices" Warren Buffett, 1996 Berkshire Hathaway Annual Report
 
"There is no formula to figure (intrinsic value) out. You have to know the business (whose stock you are considering buying). Valuing a business is part art and part science." Warren Buffett

"I remain impressed with how much easier it is for us, and everybody else who has modicum of training, to determine what a business is worth, and what the dynamics of the business might be, compared with estimating the prices at which a non-arbitrage security will sell in near-term markets." Martin J. Whitman, Chairman of the Board, Third Avenue Value Fund
 
"When managers want to get across the facts of the business to you, it can be done within the rules of accounting. Unfortunately, when they want to play games, at least in some industries, it can also be done within the rules of accounting. If you can't recognize the differences you shouldn't be in the equity picking business." Warren Buffett

"It must logically follow that if earnings determine market price, then forecasting earnings is the key to successful investing." Charles C. Carnevale, EDMP, Inc.
 
"Investment must be rational; if you don't understand it, don't do it." Warren Buffett

"If a permanent impairment of capital seems likely - sell. If there is to be unrealized market depreciation average down." Martin J. Whitman, Chairman of the Board, Third Avenue Value Fund
 
"Draw a circle around the businesses you understand and then eliminate those that fail to qualify on the basis of value, good management and limited exposure to hard times." Warren Buffett

"Whenever I read about some company undertaking a cost-cutting program, I know it's not a company that really knows what costs are all about. Spurts don't work in this area. The really good manager does not wake up in the morning and say, "This is the day I'm going to cut costs," any more than he wakes up and decides to practice breathing." Warren Buffett
 
"You should invest in a business that even a fool can run, because someday a fool will." Warren Buffett

"Investment is most intelligent when it is most businesslike" Mary Buffett & David Clark 'Buffettology'
 
"Warren took the idea that the only business worth investing in is one with excellent business economics and the theory that the time to sell an excellent business is never." Mary Buffett & David Clark 'Buffettology'

"The theory of investment value - A business's worth is related to what it will earn in the future." Mary Buffett & David Clark 'Buffettology'
 
"To buy excellent businesses at a price that makes business sense... this offers you the highest predictable annual compounding rate of return possible with the least amount of risk." Mary Buffett & David Clark 'Buffettology'

"The Price you pay determines your rate of return." Mary Buffett & David Clark 'Buffettology'
 
"Warren's Solution to all this Bear/Bull market twaddle is to totally ignore it. He can do this because he buys into a business on the basis of price (Value). Where the market is on any given day doesn't really matter to him." Mary Buffett & David Clark 'Buffettology'


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